Ten Legal Questions Small Business Owners Should Ask Themselves Now

With the start of a new year, it's important to consider if your business is ready. As a lawyer and business coach, here are 10 questions I'm asking my clients to help them avoid lawsuits and invest in growing their business.

1. Are your state records up to date?

Do you have any state or local annual filings to complete? Are you up to date on all of your licenses? Check with your secretary of state or other relevant regulatory bodies to ensure that you're compliant. You don't want a potential business partner or client to look at state records and find that your business has been administratively dissolved because you didn't complete the paperwork. Filing on time will also avoid costly fines and late fees. You'll also want to make sure that the information for your registered agent is up to date so that if your company has been sued, you'll know about it right away.  

2. Have you made any major changes to your company?

Are you operating as a corporation? Did you remove any members of your board of directors? Make sure to amend your public filings and have a valid resolution from the board so that the ex-board member doesn't have the actual or apparent authority to make decisions that could bind the company. You'll also need to amend filings if you added board members, as well as changed your business address, email or phone numbers. 

3. Did you have an annual meeting?

If your business is a corporation, almost every state requires an annual meeting of the shareholders and regular meetings of the board of directors. Check your state law and corporate bylaws because if you don't follow those corporate formalities, it could lead to legal headaches in the future. If you're operating as a limited liability company, you generally have far fewer formalities. Check your state law and operating agreement, but typically LLCs don't have as many formal requirements for the meetings of members and managers.  

4. Have you expanded to do business in another state?

You may need a certificate of authority or some other filing allowing you to do business in that state. Rules may differ if you're doing an online business, so check local law.

Do you know which of your assets need protection? Do you have trade secrets or assets that can be copyrighted, trademarked or patented? Check to make sure that none of your trademarks are about to expire and make sure no one else is infringing on your IP. If you find someone infringing, you'll want to have an attorney send a cease and desist letter as soon as possible to preserve your rights. If you've received a cease and desist letter, don't ignore it and don't respond on your own. Get a lawyer as soon as possible. For more information, check the US Patent and Trademark Office.

6. Are you protecting your customer, employee and business data from cyberattacks?

Do you even know where that data is and who has access to it? Have you considered cybersecurity insurance? Now is the time to look at your contracts with vendors and customers to see what rights, obligations and indemnification you may have if there's a breach. You'll also want to make sure you're aware of what laws apply to your business because there are often strict requirements to notify affected people and governments within a specified time frame. Don't wait until you're attacked to create a plan of action. Here's what the US government expects businesses to do. 

7. Have you hired more employees?

The federal, state and local employment laws have different requirements depending on the number of employees you have. Even if you have just one employee, you're subject to some of the laws. Click here for the Equal Employment Opportunity Commission guidance for small businesses. 

8. Have you audited your contracts for termination dates?

Are any contracts terminating this year or next year? If so, you may have notice and other requirements. Reviewing termination dates also gives you time to determine new strategies and leverage for negotiation. A lot has probably changed since you first signed that contract with your vendor, client or contractor. 

9. Do you throw everything away or do you keep everything?

Countries around the world have specific rules about how long to keep certain types of documents. If you keep them for too long, you're paying for storage. If you throw everything away immediately, you could be failing to comply with certain laws. You can find checklists online, but as with everything else, be careful. Make sure you're paying attention to state, federal, international and industry rules.

10. Have you spoken to your accountant?

Make sure you're aware of tax changes that can affect your business, whether your tax status is optimal, what you can deduct, what expenses to take now and what to defer and any other matters that can affect your business strategy going forward. Maybe you've started a new business or plan to start one from home. Update your accountant so that you can minimize your tax liability and maximize savings.

I've recommended that you check the law to make sure you're compliant. Unfortunately, that doesn't mean doing a quick Google search. Talk to a legal professional or make sure to go to official state and federal websites for more information. If you'd like to set up a consultation with me to see how I can help with 1:1 consulting or whether a course is right for you click here and let's chat.

Cheers to a profitable 2022!

The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney concerning your specific situation.